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MNI INTERVIEW: BOJ Should Review 2% Target-Ex Senior Official

MNI (Tokyo)
TOKYO (MNI)

Excessively easy monetary policy is a drag on growth over the longer term, former senior BOJ official Kenzo Yamamoto tells MNI.

The Bank of Japan should review its unrealistic inflation target, as the excessively easy monetary policy it requires lowers productivity and erodes government fiscal discipline, a former BOJ executive director told MNI.

The price target, currently set at 2% year-on-year, could be made more flexible, and perhaps reshaped as a medium-, or longer-term objective, said Kenzo Yamamoto, who served at the BOJ until 2012 and is now the representative for KYinitiative. The BOJ should also drop its cap on yields of 10-year government bonds, currently enforced by unlimited daily fixed-rate bond buying operations, he said in an interview.

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The Bank of Japan should review its unrealistic inflation target, as the excessively easy monetary policy it requires lowers productivity and erodes government fiscal discipline, a former BOJ executive director told MNI.

The price target, currently set at 2% year-on-year, could be made more flexible, and perhaps reshaped as a medium-, or longer-term objective, said Kenzo Yamamoto, who served at the BOJ until 2012 and is now the representative for KYinitiative. The BOJ should also drop its cap on yields of 10-year government bonds, currently enforced by unlimited daily fixed-rate bond buying operations, he said in an interview.

Keep reading...Show less